Chapter 13 bankruptcy is a debt repayment and consolidation plan. It consolidates most of your debts into a single payment made at regular intervals to a trustee, a court-appointed official, who distributes the payments to your creditors. The payment amount is equal to your monthly "disposable income". Your disposable income is the extra money left after you pay your necessary living expenses each month. The repayment process usually takes between three and five years, depending on your income, expenses and debts. It cannot take longer than five years, but it can be paid in less than three. There are two types of Chapter 13 plans. One type is an extension plan that pays your creditors in full, and they must leave you alone while you are paying them back. The other type of Chapter 13 is a composition plan that pays some creditors in full and some less than the total amount owed. Both types of plans protect you from harassment or contact by your creditors.

Chapter 13 can have many advantages over Chapter 7, depending on your case. More types of debts can be cancelled. You can use Chapter 13 to catch up house notes, car payments, and payments on other secured property. You can pay taxes over time with little or no interest, and sometimes at cents on the dollar. For answers to general questions about Chapter 13 bankruptcy, click on the link below: